Generative AI: The Answer for Financial Inclusivity?

What do AI advancements look like in a financial system that’s been historically slow to adapt to new, changing technology?

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May 24, 2023

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Hi there,

Whether you view it with elation or hesitation, ChatGPT and OpenAI are here to stay. We’ve already started to see changes take form across categories like media and search, But since putting generative AI in the hands of curious consumers everywhere… What are the lasting impacts that it may have across the financial industry?

AI is already having a significant impact on our financial system, and has for nearly a decade. Robo-advisors are used to create and manage personalized investment portfolios, with AI-powered chatbots deployed to provide real-time customer support for online banking and payment platforms. These products and services are not only more efficient and cost-effective than traditional financial products and services, but they also have the potential to reach new and underserved markets.

But with new advancements in generative AI, the large language models (LLMs) that underpin them can do much more than customer service. Most specifically, it can help with one of the most entrenched challenges of our time: The persistent wealth gap, driven in part by the gap between time to money.

What does this look like in a financial system that’s been historically slow to adapt to new, changing technology? For me, I see game-changing possibilities when it comes to the three “Fs”:

FRAUD

Whenever we are solving for time to money and the speed of a payment transaction, we are also solving for fraud across a variety of vectors. Today we rely on lots of human intervention, but imagine a ChatGPT powered inquiry that asks human-like questions to a dataset. By asking for a report on all suspicious activity, for example, suddenly the manual job of a fraud analyst that usually takes hours and lags in terms of actionable outcomes can be done nearly instantly. That means faster speed of payments and faster access to funds for people who need it most.

FINANCIAL ADVICE

As we look to the end of 2023 and beyond, financial advice itself is poised to be transformed with generative AI – suddenly financial advice will no longer be a bespoke service requiring a 1:1 interaction with an advisor or financial planner. The reach of financial advice will amplify and the ability to deliver sound, trustworthy financial advice in multiple languages means that every American household can have access to the financial guidance they otherwise lack due to time, access issues, and cost barriers. This can be done in a way that truly scales and can be offered by every bank or FinTech as a service layer without additional cost.

FAIR ANSWERS

In many financial transactions there is a seemingly black and white process for whether or not someone is going to be approved to access this product or service. Think mortgage application, credit card application, life insurance quote, loan application, car buying, bank account opening, etc. – sometimes the unfortunate, and very frustrating answer is “not approved.” But with generative AI on top of LLMs, the ability to properly contextualize the “why” is suddenly possible.

With AI there is now a consumer friendly way to surface and explain these “black-box” decisions and to provide the guidance on how to improve or course correct if you want to re-attempt your application. This opens the door more broadly to those who are generally underserved in financial services including folks with low FICO scores, immigrants with no credit history, and underbanked populations who struggle to identify why they were rejected and how to become viable for a particular product or service.

It is clear that generative AI is poised to have a significant impact on the way we transact money. As the technology improves and its use grows in the coming years, we can expect it to play an increasingly important role in creating a more inclusive financial system.

Cheers,

Stephany Kirkpatrick, Founder & CEO of Orum, Empire Startups Contributor

At Orum, we’re making the promise of real-time payments a reality for more people. Our single, unified API provides instant access to all major payment rails - including RTP, ACH, Same Day ACH and soon FedNow - empowering our customers to meet real-time consumer expectations and power a better financial system where everyone has the power to build to their potential. To learn more, visit orum.io.

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